Download Weekly Note - 28 July 2025
Local Market Update:
Political stability returned midweek when Parliament passed the Appropriation Bill on 23 July, ending a prolonged coalition impasse. This paved the way for Treasury to launch a US$500 million foreign‑currency funding auction, encouraging ESG-linked instruments and liability diversification to address a projected 4.8% fiscal deficit and expected gross debt of 77.4% in 2026. Platinum prices firmed, bolstering mining royalties and investor confidence, though broader economic momentum remained subdued. Market focus is now on the auction results and their implications for sovereign spreads and bond funding costs.
European Market Update:
European equity indices rose after the U.S.–EU struck a preliminary trade deal, capping most EU exports at a 15% tariff and pledging substantial investment in U.S. energy and military goods. While easing trade uncertainty supported sentiment, corporate earnings projections remain under pressure, with Q2 earnings expected to shrink slightly. The ECB maintained its policy rate at 2%, emphasising data dependency and signalling that only one further cut may occur this year. Strong Q2 results from NatWest, including a £750 million buyback, lifted financial sentiment, while executive remuneration at UK listed firms drew increasing scrutiny.
US Market Update:
U.S. capital markets posted record highs midweek, aided by trade optimism and encouraging Q2 earnings surprises—over 80% of S&P 500 companies beat expectations. However, headlines from Tesla, Intel and GM weighed on Friday. Fed policymakers held rates steady amid mixed data: PMI readings ticked higher, but durable goods orders disappointed. Jobless claims eased modestly. Investors are now preparing for key releases including the PCE inflation and non‑farm payrolls, and the FOMC press conference for cues on the timing of potential rate cuts.
Asia Market Update:
Asian equities saw mixed performance: while trade deal optimism lifted Chinese and broader Asia‑Pacific markets, Japan’s Nikkei slipped on local election-related volatility. Hong Kong and Taiwan posted modest gains in export-sensitive sectors, though risk appetite remained cautious amid rising dollar strength. Discussions between U.S. and China in Stockholm on extending their tariff truce helped temper downside risk. Investors retained a selective bias, focusing on cyclical and tech stocks likely to benefit from stabilising global trade narratives.
Currency Market Update:
The U.S. dollar strengthened as economic indicators supported delayed rate cuts. The euro rallied modestly to around $1.175 following the trade agreement, though economic growth remains tepid. Sterling eased amid soft UK consumer data and IMF warnings over fiscal headroom. The yen weakened, pushing USD/JPY above the 147 threshold ahead of the BOJ meeting. The South African rand held steady at roughly R17.80/USD—supported temporarily by Treasury developments and commodity strength—while broader emerging-market currencies, including the Indian rupee, lost ground amid risk-off flows and tightening global financial conditions.
Commodity Market Update:
Oil reversed early-week gains to close slightly lower, pressured by a sharp build in U.S. crude inventories. Gold declined, weighed down by reduced safe‑haven demand as equity markets advanced. Copper and base metals posted modest gains, with improving industrial signals offsetting lingering tariff anxieties around green‑tech imports. Rubber prices rose sharply in Asia on supply constraints. Cocoa and soft commodity markets remained steady, though cocoa showed softness amid emerging geography-specific political risks. Commodities now remain especially sensitive to trade policy momentum and macroeconomic surprises.